Dubai Financial Market turned bullish from its support levels yesterday amid a buying trend in active stocks.
The general index added 16.28 points, or 0.98 per cent, to close at 1,677.59 points.
The market opened with a strong gap up of around 21 points in the first few moments of trading with active buying of leading stocks, including Arabtec, Emaar, DSI, Union Properties and Deyaar.
The same stocks had faced strong selling pressure during the previous two sessions.
However, a pattern of quick profit booking within the same session led to sharp fluctuations in the index for a second day.
The market faced quick downturn movements and nearly touched the previous close before it reversed its direction upwards again and hit the intraday resistance level of 1.691 points by midday. The index continued fluctuating until the end of the session, surrendering some of its gains.
Turnover continued at moderate levels with 412.3 million shares changing hands at a total value of Dh531.1 million.
Most of the turnover was concentrated on active stocks led by DSI, Arabtec, Union Properties, Ajman Bank and Deyaar.
Arabtec opened with a sharp rally to Dh2.22 but quickly turned bearish and fell to Dh2.14 before fluctuating until the end of the session and closing at Dh2.16.
Emaar advanced to Dh2.61 before falling to Dh2.55. During the last hour of trading Emaar witnessed strong buying and rallied to Dh2.63 before losing some of its gains and closing at Dh2.61, up 2.75 per cent.
The same movements were seen with DSI – which attracted 30 per cent of the total trade volume – as it fluctuated sharply between Dh0.76 and Dh0.80 and closed at Dh0.80, adding 3.89 per cent.
Despite the rally in real estate stocks, heavyweight Emirates NBD put pressure on the index after as it retreated 2.77 per cent to close at Dh2.80.
The Emirates NBD announced that it would disclose its first quarter 2009 results next Wednesday.
The DFM's upward movement came as the United States and GCC markets, with the exception of Kuwait, recovered.
The current fluctuations on the DFM are expected to continue during the coming few sessions with sideways trends in the market. Analysts expect investors will take cautious movements and this may affect the DFM with limited ups and downs.
"The market has started a sideways trend in the short term as investors are waiting for a clearer direction after the announcement of first quarter results within the next two weeks," said Ahmed Abdul Rahman, Head of Research at Amanah Financial Services.
"The first quarter results will play a major role in determining the trend during the next three months."
Rahman said he expected movements in real estate stocks would continue to dictate the DFM's performance.
"There is correlation with the sentiment in global markets despite the declining impact of foreign investors in the market.
"In the current situation the real estate sector is dominating movements in the market and is expected to continue to play this role in the short term."
Senior market analyst Ahmed Al Rawi said the DFM would go through a sideways period with a tendency to the upward direction throughout the summer.
"The index should stabilise at the current level and avoid sharp fluctuations to achieve consolidation in the market," he said.
"We saw the index advancing by around five per cent in some sessions and then retreating by more than four per cent. These sharp fluctuations are creating uncertainty and hesitation among investors."
Al Rawi stressed the need for calm trading on the DFM over the next three months, which could be a period of consolidation before the market changes its long-term trend to the upward.
Analyst Nidine Wehbe said the concentration of trading on selected stocks reflected uncertainty in the market among investors regarding the first quarter results.
"The market witnessed two waves of ups and downs," she added.
"The second movers were stronger than the first movers. This shows that increasing number of investors were waiting for movements in the market."
"However, sentiment is improving in the market as the first movers remained in the market and encouraged more cautious investors to take positions during the second wave of buying."
DIC sees strong fluctuations
DIC witnessed strong fluctuations during the session as it opened up and rallied to Dh1.35 before falling to Dh1.30.
The stock closed flat at Dh1.32. The DFM suspended trading in the stock before midday, pending statements from the company.
Trading resumed after the company announced the postponement of its general assembly meeting due to the lack of a quorum. The meeting will be reconvened next Tuesday.
The company issued a statement denying reports that its profits for the first quarter of 2009 were Dh488 million, stressing that these were profits for the first quarter of last year.
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